Bear Market Investing Strategies is designed to upgrade investors’ knowledge with the basics of how to make investment decisions, with particular reference to bear markets, bull market corrections and recessions. But simply knowing how to make respectable buy and sell decisions is not enough.
This book offers both the novice and the seasoned investor perspectives on investment theory and strategies, with particular reference to recessionary times.
Chapter 2 defines exactly what a bear market is and how it is different from corrective reactions in a bull market. Wars, terrorism, politics, and social events in the main only affect markets indirectly. Chapter 3 describes past bear markets, as measured by the Dow Jones Industrial Average. The purpose is to create models of what past bear markets looked like, to be used as context when you construct your own view of possible future action.
Chapter 4 lists economic and other general signs that suggest a bull market is ending and a bear market is beginning. Chapter 5 discusses foreign investment and whether one should put money abroad in a bear market. Chapter 6 discusses the difference between a bear market rally (secondary reaction) and the beginning of a new bull market.
Chapter 7 is the mirror image of Chapter 6. It discusses down-legs in a bear market and how they differ from reactions in a bull market. Chapter 8 lists specific technical indicators that you can use for measuring both bull and bear markets (tools which act consistently in both bull and bear markets). Chapter 9 lists those technical indicators that behave very differently in bear markets to bull markets, so you need to decide which is occurring before you use these indicators.
Chapter 10 discusses the usefulness of Cycles study. Cycles have their modest place in your toolbox of past models of markets, but the past never repeats exactly—as many cycles aficionados would have you believe. Chapter 11 teaches you about chart reading and chart interpretation. For most people, data in the form of a chart is more meaningful. ‘‘A picture speaks a thousand words.’’
Chapter 12 gives basic rules of investment in a bear market, when preserving capital is more important than risk taking. Chapter 13 teaches you all you ever wanted to know about short selling. Chapter 14 is perhaps the most important chapter in the book. No matter how savvy an investor you are, there will be times when you will be quite wrong about the direction of the market.
Chapter 15 shows no matter whether you are a short-, medium- or long-term trader or investor, you really must develop a more flexible approach to buying and selling in a bear market than in boom times. Bear markets are a lot more volatile than bull markets, so they have to be watched more closely.
Chapter 16 offers you some defensive investments that enable you to sleep nights, some of which you can hold long term. The trick is deciding what sort of bear market we are in, before you decide which defensive investments to choose. Chapters 17 and 18 discuss how human emotions, particularly your emotions affect your investment decisions.
- THE BEAR BACKGROUND
- ECONOMIC SETTING FOR BEAR MARKETS
- STRUCTURE OF BEAR MARKETS
- TOOLS FOR MEASURING BEAR MARKETS
- MONEY-MAKING TACTICS
- THE EMOTIONAL ASPECT
- PREDICTIONS AND CONCLUSIONS